Xi defiance wins big as Trump concedes to China’s trade demands

After two days of high-stakes negotiations in Switzerland, trade officials from the world’s largest economies announced a major breakthrough Monday: a sweeping rollback of tariffs. In a coordinated joint statement, the US revealed it would slash duties on Chinese goods to 30% from the previous 145% for a 90-day window, while Beijing reduced its tariffs on most products to 10%.

The scale of the tariff cuts surpassed expectations in China and sparked a rally in global markets. The dollar and stocks surged, offering much-needed relief to President Trump amid mounting inflation concerns at home. Chinese equities also climbed sharply.

Beijing gets most of what it wanted

The agreement fulfilled nearly all of Beijing’s key demands. The elevated “reciprocal” tariff of 34% that Trump imposed on April 2 was suspended, aligning China’s rate with the standard 10% applied to all trading partners, including the UK — which reached a separate deal with the US just last week.

In another concession, the US established a negotiation framework led by Treasury Secretary Scott Bessent, addressing China’s call for a dedicated point person. Both sides also committed to take “aggressive actions” to curb fentanyl trafficking, a move that could pave the way for removing the additional 20% tariff in the future.

“This is arguably the best outcome that China could have hoped for — the US backed down,” said Trey McArver, co-founder of research firm Trivium China. “Going forward, this will make the Chinese side confident that they have leverage over the US in any negotiations.”

Xi’s calculated defiance pays off

Throughout the tariff standoff, Xi Jinping maintained a firm stance, refusing Trump’s repeated phone calls and allowing US tariffs to rise to levels Chinese officials mocked as a “joke.” While other leaders engaged with Trump, Xi focused inward, cutting interest rates and strengthening China’s economy, even as factory output faltered.

Beijing also launched a diplomatic campaign to win new markets and denounce what it described as US “bullying.” At home, a wave of nationalism helped Xi resist calls to yield to American pressure. Meanwhile, Trump came under growing fire from US businesses, financial markets, and fellow Republicans worried about next year’s midterm elections.

“The lesson is economic power matters,” said Gerard DiPippo, associate director of the RAND China Research Center. “For Beijing, it’s a strategic vindication, and one that makes Xi’s focus on manufacturing and self-reliance harder to argue against, at least from an economic security perspective.”